Telecoms.com

a week in wireless

The rain in Spain

There’s no escaping the economic blight in Southern Europe, and Vodafone this week announced that it was planning cuts to its Spanish workforce, with local unions suggesting that the action could affect as many as 1,000 people. You’ll remember that Vodafone wrote down its Spanish and Italian operations by almost £6bn at the back end of last year blaming poor market conditions—and things are clearly not looking up.

Last year Vodafone decided to try and cut handset subsidies in Spain as a means of saving money. The result? Its subscriber base dropped from 16.8 million in March 2012 to an estimated 14.7 million at the end of the year, according to Informa’sWCIS.

Ovum’s Emeka Obiodu told Telecoms.com this week that Vodafone may not be the only operator looking at redundancies in Spain. Telefónica also gambled on a cut in handset subsidies and, while still the clear market leader on its home turf, shed a million customers in the nine months to the end of last year, according to WCIS.

Asking people to pay more for something than they used to, during times of intense economic hardship, didn’t work. Life’s full of surprises, isn’t it.

German incumbent Deutsche Telekom announced some job cuts of its own this week, with local press reporting that 1,200 admin positions are for the snip, while Nokia is slashing 1,100, partly through outsourcing, from its IT department.

At Indian carrier Bharti Airtel there’s just the one job going this week, but it’s the most senior, with Sanjay Kapoor, head of the firm’s Indian and South Asian unit announcing his resignation. While Kapoor gave no reason for his departure, the Indian business press pointed towards declining profits as the probable prompt. He’ll be succeeded by Gopal Vittal, currently the firm’s director of special projects.

Also on the up in India is Alcatel Lucent, which announced a $1bn managed services with with Bharti’s competitor Reliance this week that will see it provide end-to-end managed services in Eastern and Southern India until 2020. Some 4,000 Reliance employees will move to ALU, freeing the operator from the burden of their eventual redundancy.

Rajeev Singh-Molares, president, Asia-Pacific for Alcatel-Lucent, said that the vendor is renewing its focus on managed services as it looks for more value-added contracts.

“The enormous scope of this agreement will bring a wide variety of skills, expertise and hands-on know-how that we can leverage for the benefit of others,” he said.

The deal provides crucial impetus for Alcatel-Lucent; the vendor’s share of the managed services market is currently at seven per cent, according to data from Informa Telecoms & Media, behind rivals Ericsson, IBM, NSN and Huawei. It is forecast to drop to six per cent by 2017. The firm also saw its number of new managed services and outsourcing contract wins drop from 24 in 2009, to just four in 2011.

Huawei, of course, has about as much chance of bagging a big Indian services contract like this as Lance Armstrong has of winning the next Tour de France on a Boeing Dreamliner. A report in the Hindu Business Line this week profiled more of Huawei’s Indian woes as it was left off of a list compiled by India’s Department of Telecom of vendors with local manufacturing facilities.

Huawei claimed to have made significant investments in India with more planned but the DoT was unmoved. Huawei turned to the operator community in a bid to drum up support, saying it was “dismayed and disappointed to learn that, despite its sincere and earnest efforts to localise the manufacturing capabilities, its name does not figure in the list of domestic manufacturers circulated by the DoT.” Whether the operators come out in support, and whether it has any impact on the DoT, remains to be seen.

At least Huawei can console itself by picking up contracts elsewhere. On Friday the firm announced a deal with Sri Lankan fixed operator Dialog Broadband that will see the operator make a move on the mobile market with a LTE TDD network launch. The first of the two deployment phases was completed at the end of last year, Huawei said, and coverage is already available in the capital Colombo.

On Thursday it announced a three-year deal to supply Telenor group with IP microwave technology while earlier in the week it was announced that Huawei and Ericsson had both won network expansion deals with Saudi Arabian operator Mobily.

Mobily’s parent company, UAE-headquartered Etisalat had other kinds of expansion on its mind, meanwhile, when it confirmed this week that it has submitted a preliminary expression of interest to acquire French conglomerate Vivendi’s 53 per cent shareholding in Maroc Telecom, as it looks to expand its geographic footprint.

Maroc Telecom, a publicly listed company on both the Casablanca and Euronext Paris Stock Exchanges, is Morocco’s market leading operator with over 17.4 million mobile subs, according to Informa’s WCIS. It also has international operations in four West African countries.

Etisalat is not alone in its interest in the Moroccan operator, with France Telecom, Qatari operator Qtel and South Korea’s KT Corp also mulling bids to acquire the majority stake.

Meanwhile Saudi Arabia’s telecoms regulator the Communications and Information Technology Commission (CITC) said this week that it will invite applications for MVNO licences. The regulator said that it would allow up to three new MVNOs to enter the market to increase the range and variety of services for consumers and encourage those core values of fairness and transparency.

MVNOs are also on the agenda of Orange, which has launched a subsidiary that aims to increase its brand awareness in countries where it is not already present as a mass-market service provider. The firm is looking to lay foundations before it launches business ventures in several other countries in 2013 in Europe and Africa, including setting up new MVNOs.

The operator said the subsidiary, called Orange Horizons (as in, say, when the sun goes down..?), would also “provide a new source of revenue for the group and improve customer loyalty across its footprint without the firm making any significant investments.” Now that’s a hell of a business model. If the Informer was Orange (the firm, not the colour), he’d be keeping that kind of thing secret.

The first of Orange Horizon’s projects has already been launched in South Africa and which comprises two websites: an e-commerce website to sell telecoms-related devices and accessories, and a portal which provides online content “specifically tailored for a South African audience including news feeds, sports news and audio-visual content.” All of which is very ten years ago.

The launch of these services coincides with the start of the Africa Cup of Nations 2013 pan-African football tournament in South Africa, which Orange is sponsoring. Six countries in which Orange is already present will be playing in the tournament.

At a roundtable in London last week, the firm identified Algeria as one market where it is keen to grow its presence, hailing it as a large, important market that is developing at a rapid pace. Yup, stuff is happening in Algeria, alright.

It also identified opportunities in Libya and Ethiopia. The latter has a state-owned monopoly operator Ethio Telecom, which Orange is already providing services to, and it is keen to exploit any opportunities if and when the country opens the market up to new entrants.

Orange: going into markets so you don’t have to.

Let’s nip over to Canada now, where the market’s largest mobile player Rogers Wireless has entered into an asset swap with broadcast player Shaw Communications. Shaw will transfer AWS spectrum licences to Rogers in BC, Alberta, Saskatchewan, Manitoba and Northern Ontario, as well as shares in cable firm Mountain Cablevision. In terturn it will get Rogers one-third share in pay TV channel TVtropolis (in which Shaw owns the remaining two thirds) and $700m.

South of the border there are rumours that, thwarted in its bid to buy T-Mobile, AT&T is looking to Europe for a potential acquisition. A report in the Wall Street Journal suggested that AT&T is looking at Germany, the Netherlands and the UK for potential targets. Those targets could include Everything Everywhere, the Orange/Deutsche Telekom JV that recently stole a march on competitors with its LTE 1800 launch, the report suggested, as well as KPN. Don’t hold your breath.

Sticking in the UK, where we are currently experiencing our annual Snow News Day, in which the whole country marvels at an unremarkable meteorological phenomenon while the public transport infrastructure rolls lifeless onto its back with its legs in the air, the banking community has delayed a huge project to deliver mobile payment to all consumers.

The UK Payments Council has announced that the introduction of its planned Mobile Payments Service has been pushed back until “spring 2014” – a year after its previously expected introduction, and two years after Barclays broke from the rest of the UK banks and launched its Pingit service.

Some institutions are frustrated by the delay, according to a source known to the Informer’s chums at bankingtech.com. But they see a need for a united front, and that means “almost by definition they have to move at the pace of the slowest”, said the source. “It is a year’s delay against the originally conceived introduction, but the banks have been taking stock of what they want to be able to offer, and there have been considerable enhancements to the nature of the service.”

Does this give the mobile operators a chance to establish themselves to a greater extent before the banks come in and mop up in what is indisputably their territory? Who knows?

Finally, in a move that reflects the changing roles of the various players in the mobile value chain, Japanese operator Softbank has sold two thirds of recently acquired competitor eAccess to a consortium including Ericsson, Nokia Siemens Networks, Alcatel Lucent and Samsung. eAccess has its own consumer facing brand in Japan, eMobile, but also acts as a wholesale host to a number of MVNOs.

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